Are there any of those free home-buyer education courses in your area? I'm sure it's tough to find one that's non-biased or that won't try to sell you on their services, but they're full of information. We attended a class conducted by Alaska Housing Finance Corporation, which is a state-created entity. The class was extremely informative of the whole process, as well as the options available, the pitfalls and information about home maintenance and care. The advantage for us was that if our mortgage went through AHFC we would get a small discount off the fees during closing.

I'll put a link below to the AHFC web site. You can download a copy of the book that is handed out during the class. It may answer some of your questions.

Here is a link that might be useful: AHFC HomeChoice

Agents' commissions are paid to the agency (or agent) and have nothing to do with your mortgage.

Here is a link to a previous thread about asking prospective agents the right questions before listing. This was created by roselvr and is really terrific.

Make sure you have an "out" clause so if you are unhappy with your representation, you can get out without paying any fees or fines. I would recommend you only list for 90 days with a provision that if you are happy with your realtor, that you can extend your listing monthly.

Here is a link that might be useful: List of questions for realtors

braytonak: Thanks for that tip; I'll find out.

lucy: I understand to whom they are paid, I just don't understand HOW they are paid in those circumstances. Would it come out of my pocket or would it come with the financing of the loan?

fairygirl: Thanks for that link. It's great for sellers - but I'm a buyer. Informative though.

Thanks for the responses so far.

Allison

bestalikat , anyway you look at it it comes from your pocket... it is just a matter if it is directly or indirectly.

There are buyer agents and then there are "buyer agents". There is a true buyer agent and the agent-that-brings-in-the buyer. Depending on state laws, there is a huge difference in services and fiduciary duty of these agents. Your best bet would be to find out the laws in your state as to whom the buyer agent owes their allegiance. This may depend on who is paying them.

The direct payment method: You sign an exclusive contract with a buyer agent and pay them either a set fee or XX based on the amount of the home purchase. This agent works for you.

The indirect payment method: The seller pays all agent fees. Since you are paying the seller, that is how they get the money to pay the agent. This agent may/may not actually work for your best interest. It depends on the state law, if there is a contract, etc.

It is extremely important you know the laws of your area prior to contracting with an agent. While they all are obligated to be "fair and impartial" the truth is that when the seller is paying, weeellll let's just say don't ever tell an agent that you are not paying directly how high you are willing to go on a house purchase. The agent will be obligated to pass on that information as part of their fiduciary duty to the seller in many/most parts of the country.

I'm not sure this will answer your questions, but here is a Oregon Property Buyer Advisory

Give your Credit Union Mortgage person a call and ask him/her which realtor/company is bringing the most home sales to closings.
That is how we found our realtor. I owe the mortgage people at my bank a big thank you.
Kathy G in MI ----sold

Thanks for the additional advice. I found several websites that gave questions to ask a buyer agent.

Also, I'm meeting with a different mortgage officer sometime this week to discuss the Oregon bond program which gives a discounted interest rate for first-time buyers, subject to restrictions.

It's kind of scary to think this may really happen!

A

Check out the property taxes. No state tax but very high property taxes. Also find out if they still evaluate them each year. Several years ago, we visited friends. They painted 1/2 of there house, one year, and then the other half the next. That way the appraisal wasn't so bad.
Check with banks and credit unions also. Many of them also offer first time buyer rates, and above all DO NOT GET a adjustable rate loan. Make sure you do not have a pre-payment penalty. You should be get a loan that allows you to pay any amount over the required payment without a problem. Get everything in writing. Accept NO verbal statements. I am not familiar with discounted interest rates, check with your bank because you could end up with a baloon payment etc.
Look in the Sunday papers in the RE section. Many times there are excellent articles regarding buying etc. Don't be afraid to ask a zillion questions and wrtie everything down.
Be aware of the mortgage companies.

I'll second this: Make sure you do not have a pre-payment penalty. There's no reason why you should have to pay a fee to pay off all or part of a mortgage early.

Also, it's important to know that even if you're at the closing table, you're not 'stuck.' What I mean by that is that in so many of these stories where people wound up bait-and-switched into loans with higher interest rates or penalties or whatever, they didn't find out until closing, at which point they thought 'it's too late' and signed anyway. If the paper they give you to sign isn't what you expected, speak up. Also, if on your final walk-thru of the house, there's something not right--they took away the fridge, or there's a hole in the door, or whatever--speak up. Closing can be delayed if there's a problem; once you sign, it's your problem.

It might be a good idea to start living as though you were paying a mortgage. If the bank says you're eligible for a mortgage of $x, w/ a monthly payment of say $2,000, start taking $2,000 (or the difference between $2k and your rent) off the top of your income and put it in a separate bank account, not to be touched. See what it feels like. If you have lots of money left over, then great, you can afford that mortgage. If it pinches, then you should look for a less expensive house. And, as a bonus, you have a savings account to use toward the down payment.

Also, it's important to have your financing pretty much in order before you really get serious about shopping. A lot of sellers won't accept an offer from someone without a pre-approval letter. So you should have a pretty good idea of where you're going for a mortgage so you can get that letter if you find the right house. (Pre-approval is different from pre-qualification. It involves giving your financial info to the bank; they evaluate and say 'on this basis we'd give a mortgage of $x.' You get this in the form of a letter that you can enclose w/ your offer. They can still change their mind, but it at least shows that as of when you sent your info, you were credit-worthy.)

That reminds me--get a copy of your credit report now, and look it over to make sure there are no mistakes. You don't want any surprises when you've found 'the' house. Don't fall for any of those ads that offer a 'free' credit report when you buy their service. You're entitled to a free report from each of the bureaus once a year.

HTH

Here is a link that might be useful: this is the official free credit report site

Hi Allison,

I couldn't find any non-advertisement articles (meaning the ones I saw were by people trying to get me to hire them) about how to go about choosing a real estate agent. What things should I consider?

Above & beyond anything and everything else... set your radar to shop for;
A) Trustworthiness,
B) Respect-worthiness.

To determine whether they are, or are not, this... interview them with PERSONAL (non-business, non-real-estate) questions, and listening very carefully... then get referrals to speak with, and ask questions of the referral folks in regard to the prospective professional's character.

All the shiniest presentations and surface-level promises are meaningless if you get engaged with a slick sociopathic huckster (and the definition of a sociopath is that they master LIKEABILITY... so you really have to DIG to get to the core.)

Also, I see listings that say "buyer agent to add commission to sales price". I'm confused about that. Is that 3% something that is allowed to be covered in a mortgage loan?

If the sales price itself is adjusted to reflect the 3% buyer's agent commission, then yes, you can finance that into your mortgage.

Housenewbie,
There's something important you're missing in your advice;

I'll second this: Make sure you do not have a pre-payment penalty. There's no reason why you should have to pay a fee to pay off all or part of a mortgage early.

The term "penalty" is a misnomber, as nobody is being "penalized" for anything.

Prepayment penalties are completely mutually voluntary, and reduce the borrower's interest rates, or get them better terms (higher loan amount or longer fixed periods) or a combination of all of that... so, if a borrower feels certain enough that they won't be refinancing or moving for 3-5 years, they can often get a significant benefit by making the commitment to the lender up front.

All else equal, a program with a commitment period (prepayment penalty) will ALWAYS be cheaper and safer for the period chosen for the borrower.

It pays to weigh your options carefully.

Cheers,
Dave Donhoff
Strategic Equity & Leverage Planner

I agree with DD, a prepayment penalty is not necessarily bad, it is only for a fixed amount of years to protect the lender if you refi right away.
When shopping ask for quotes on different terms. I understand fixed are low now, but many times a five or ten year fixed is much lower than a thirty years. If you know you will move or refi before then it may work out better.

the truth is that when the seller is paying, weeellll let's just say don't ever tell an agent that you are not paying directly how high you are willing to go on a house purchase. The agent will be obligated to pass on that information as part of their fiduciary duty to the seller in many/most parts of the country.

Totally false information in any area of the country. Buyers agents don't have a fiduciary duty to the seller. The buyers agents fiduciary duty is to the buyer even when buyers don't pay the buyers agent directly.

Linda117 Totally false information in any area of the country. Buyers agents don't have a fiduciary duty to the seller. The buyers agents fiduciary duty is to the buyer even when buyers don't pay the buyers agent directly.

Linda117 I am in NYS too. This actually happened to me when I purchased my first home many years ago. To say it is "Totally false information in any area of the country" is a false statement.

It is true that in the past all agents were considered to be working for the seller, and owed fiduciary duty to them. Because of lawsuits brought by buyers who were led to believe that the agent was working for them, RE laws have changed in many states since then. I hold a RE license in Oregon, and agents that work on a buyer's behalf, even without a signed agency agreement, are considered to be an agent of the buyer and owe the buyer fiduciary duty.

Xamxs I am in NYS too. This actually happened to me when I purchased my first home many years ago. To say it is "Totally false information in any area of the country" is a false statement.

I should clarify, It is a false statement in any area of the country that practices Buyer Agency.

Xamsx what happened to you, happened to you because you did not have a buyers agent. You only had an agent who was showing you properties. This was the reason Buyer Agency was instituted. Just because an agent is out with a buyer showing them properties doesnt mean they are working for the buyer.

Just because an agent is out with a buyer showing them properties doesn't mean they are working for the buyer.

In Oregon it does. Agency is implied by the actions of the agent - that is how Oregon RE agency law is written.

Xamsx said that it happened "many years ago". As I said in my previous post that WAS the norm many years ago. Things have changed. Every buyer and seller should check out their own state's RE agency laws.

Terriks, I read Oregon Buyer Agency Law. It doesnt seem to say anything is implied. It specifically states it must be acknowledged. Here is the link. http://www.coquille-homes.com/pdf/OREGON%20REAL%20ESTATE%20AGENCY.pdf I could be wrong, Im not familiar with Oregon agency law, however, this is the statement that got a response from me, which is totally false. I dont want this to turn into another argument about Buyer Agency.

the truth is that when the seller is paying, weeellll let's just say don't ever tell an agent that you are not paying directly how high you are willing to go on a house purchase. The agent will be obligated to pass on that information as part of their fiduciary duty to the seller in many/most parts of the country

Buyers Agents represent the buyer, plain and simple even if the Buyers Agent isnt collecting the money from the buyer.

Thanks everyone for the additional information.

In the flyer linda references, it says that buyer agents don't need to show you any property where the buyer agent payment isn't included in the price. Guess I'll have to tour those on my own. =)

I appreciate the advice.

I'm meeting with the new loan officer tomorrow. This is the one that uses the Oregon bond program for first-time home buyers at a lower rate.

A

In the flyer linda references, it says that buyer agents don't need to show you any property where the buyer agent payment isn't included in the price. Guess I'll have to tour those on my own. =)

If a house is listed on the MLS the buyer's commission should be included in the price.

Allison -

Oregon has MANY first time buyer and down payment assistance programs and MANY loan officers can assist with them. Don't limit yourself to one because they are the only one you have heard of so far.

If you can make it up to Portland for a day the Portland Development Commission offers a first time buyer's class that is very beneficial. They also have a list of mortgage brokers and lenders who specialize in first time buyers.

Good luck!!

Allison,
I bought a house in Portland in 1998 using the Oregon bond program. It is a good program for firt time home buyers but you need to be aware of a few things. There is a penalty if you sell your house within 10 yrs. It goes up (the amount you pay) every year for the first five and then goes back down for the next five. If you don't make too much profit on the house or your income doesn't go up too much it is not a problem. In my case it almost was an issue because I was single when I bought the house and married when I sold it. Also the profit on the house makes a difference. I did not have to pay the fee as my husband and I filed separately so his income did not count when I sold my house.
I think the difference in the loan amount is about .5%. You might want to look into an FHA loan which is similiar without any prepenalty worries.
Now is a great time to buy a house in Oregon and I am sure you will be very happy being a home owner!

Good luck,

Theresa

Dave,

I have to respectfully disagree.

The term "pre-payment penalty" is a misnomer, as nobody is being "penalized" for anything.

Prepayment penalties are completely mutually voluntary, and reduce the borrower's interest rates, or get them better terms (higher loan amount or longer fixed periods) or a combination of all of that... so, if a borrower feels certain enough that they won't be refinancing or moving for 3-5 years, they can often get a significant benefit by making the commitment to the lender up front.

All else equal, a program with a commitment period (prepayment penalty) will ALWAYS be cheaper and safer for the period chosen for the borrower.

As we've seen so much lately, all else isn't necessarily equal, stuff happens, and you could wind up paying tens of thousands of dollars for the 'right' to sell your house. When I was looking at mortgages, the ones w/ prepay penalties had the same ballpark interest rates as the non-penalty offerings. So it seemed pretty one-sided, heads they win, tails I lose.

I forget which thread it was on now, but the NY Times article where a prime borrower was heading into foreclosure because of an ARM and prepay penalty of $40k on a loan of less than $400k seemed pretty heinous to me. That's starting to get into real money, and at >10% of the loan, is way out of line.

"I forget which thread it was on now, but the NY Times article where a prime borrower was heading into foreclosure because of an ARM and prepay penalty of $40k on a loan of less than $400k seemed pretty heinous to me. That's starting to get into real money, and at >10% of the loan, is way out of line."

A prepayment penalty is typically 6 months of interest on the current mortgage balance less 20%. So, the prepay would be calculated on $320,000. For the prepay to be that high the monthly interest would need to be around $6500, which is far more than the payment would be on a $400,000 loan even with a hideous interest rate.

There are a couple other types of prepayments out there, but they are few and far between, and usually reserved for the very non credit worthy. In other words - those who should have known better than to get the loan in the first place.

I think maybe the owner or the Times were exaggerating a bit. Not a fan of prepays at all, but lets be realistic.

Old thread. Anything new? Prices going down and interest rates going down. Great time to buy if you're able.